Weekly Real Estate News
Summary
H&R REIT agreed to acquire Lantower’s approximately 70.9% interests in two Florida apartment developments totaling 601 planned units, subject to approvals and closing conditions.
H&R Real Estate Investment Trust has agreed to acquire Lantower Residential Real Estate Development Trust No. 1’s approximately 70.9% interests in two Florida apartment developments expected to total 601 units.
According to H&R REIT’s Oct. 5 announcement, wholly owned H&R subsidiaries will acquire the interests in projects in Largo, in the Tampa market, and Kissimmee, in the Orlando market. Together, the developments are expected to contain approximately 606,000 net rentable square feet.
The all-cash transaction values Lantower’s joint-venture interests at a gross price of approximately $84.3 million, assuming a Dec. 1 closing. The estimated net purchase price is approximately $77.9 million after accrued asset-management fees and carried interest, according to the announcement.
Transaction would consolidate H&R’s ownership
Lantower said the pricing would produce a 20% pre-tax gross compounded annualized return for holders of its U.S.-dollar-denominated units before asset-management fees and carried interest. That figure is a transaction calculation disclosed by the seller, not a forecast of the projects’ future property-level returns.
The deal follows a pending change of control at H&R that was announced in August. The parties said the transaction was negotiated under the management agreement governing the Lantower development trust and its joint venture.
After closing, Lantower subsidiaries are expected to distribute the net sale proceeds to the trust. The trust then expects to distribute its remaining net assets, after reserves for taxes, transaction costs and other liabilities, to unitholders and cancel the outstanding trust units.
The transaction remains an agreement rather than a completed acquisition. Its final value will depend in part on the closing date and the deductions described by the parties.
For H&R, the acquisition would increase its direct economic exposure to two Sun Belt residential developments in major Florida metros. Residential real estate already represents the largest portion of H&R’s portfolio: the REIT says residential accounts for 66% of the fair value of its real estate assets.
H&R would be consolidating interests in projects already connected to its broader Lantower platform rather than entering the developments as an unrelated outside buyer.
